What Is the Difference Between Litecoin and Bitcoin?

What’s the difference between Litecoin and Bitcoin? Which one to invest in? ⚡ Which is safer and more profitable? Read on to find all the answers.

A Short History of Litecoin and Bitcoin

Bitcoin is the first cryptocurrency and the most successful coin in the market so far. It was launched in 2009 with the aim to replace fiat money. While the aim hasn’t been achieved yet, many people consider Bitcoin a profitable investment.

Litecoin was founded two years later as “silver” in addition to “Bitcoin’s gold”. It has always been considered Bitcoin’s main competitor, even though Litecoin’s initial intention was just to improve some network aspects such as scalability and transaction speed.

Is Litecoin a Fork of Bitcoin?

Litecoin is a fork of Bitcoin. The new coin was created to solve the issues that the Bitcoin blockchain started facing: network scalability and transaction speed. So, both coins have a lot of things in common.

Litecoin and Bitcoin Similarities

Proof-of-Work

Both Litecoin and Bitcoin utilize the Proof-of-Work algorithm to confirm transactions on the blockchain. Therefore, the underlying process for crypto mining is the same in both cases. The new transaction is generated, authenticated, and then added to the blockchain.

Both coins are difficult to mine. Most miners use complex equipment or join mining rigs to increase their chances to confirm a new block and receive an award.

Store of Value and Transactions

Both coins can be easily bought and sold on the majority of exchanges, including LetsExchange. For both coins, a user would need a wallet to store them. The majority of wallets support both Bitcoin and Litecoin. And finally, both coins are prone to dramatic volatility over time.

Differences between Bitcoin and Litecoin

Litecoin has introduced some new technologies and approaches. This actually allowed the coin to survive the high competition in the market.

Distribution

The very first thing that every user notices is the number of coins that can be produced. In the case of Bitcoin, the total number of coins is limited to 21 mln. Litecoin can accommodate 84 mln coins. It might be considered as a psychological advantage of Litecoin because users perceive it as if they can buy more Litecoin coins.

While this detail seems to be advantageous for Litecoin, in reality, it didn’t show much significance. Bitcoin has always been the most expensive coin in the market. For now, it doesn’t look like there is a viable competitor to Bitcoin. Another detail to consider is that Bitcoin can be divided into very small fractions called Satoshis. One Satoshi equals 0.00000001 BTC. It allows users with a low income to purchase the smallest fractions of Bitcoin. Along with it, many wallets have already implemented an option to display the Bitcoin funds in USD or EUR equivalent. This benefit allows users to overcome the aversion of dealing with very small fractions.

Transaction Speed

While both coins utilize the Proof-of-Work protocol, so transactions are confirmed in the same way, Litecoin aims to improve one of Bitcoin's main drawbacks: slow transaction speed. While one transaction in the Bitcoin network takes around 10 minutes on average, one transaction in the Litecoin network is confirmed within 2-3 minutes. It is a significant benefit of Litecoin in the eyes of merchants.

Cryptographic Algorithms

One of the main differences between the two coins is cryptographic algorithms they employ.

Bitcoin utilizes a well-known SHA-256 algorithm while Litecoin applies a newer Scrypt algorithm.

This difference influences the process of mining new coins.

While both coins use the PoW, mining requires a lot of energy in both cases. However, SHA-256 is more complex than Scrypt. But it allows a greater degree of parallel processing. So, Bitcoin miners invent new ways to mine Bitcoin as efficiently as they can.

Bitcoin is usually mined by ASIC miners combined in a mining pool. It means that not everybody can join Bitcoin mining. Moreover, some mining pools are known to have the highest hashing rate which means they can mine more blocks than anybody else. This fact itself contradicts the main principle of cryptocurrency - decentralization.

Scrypt is less susceptible to ASIC miners. While some companies have already developed Scrypt ASICs, Litecoin can still be mined with GPU and CPU. It makes Litecoin mining accessible by the majority of people and provides the needed level of decentralization.

Litecoin vs Bitcoin: Investment

Both coins are attractive for investors. One shall consider that Bitcoin is the very first cryptocurrency. For many people, Bitcoin is associated with cryptocurrency in general. It is an important aspect for investors to consider.

However, Litecoin has some benefits that make it a feasible investment, too. Its relative resistance to ASIC mining and the availability of GPU and CPU mining make the coin closer to people. The transaction speed also is to the benefit of Litecoin.

Litecoin vs Bitcoin: Money

Both Bitcoin and Litecoin are used as money: coins can be sold, bought, exchanged. Some vendors already accept payments in BTC and LTC. The popularity of these coins is growing in the gambling and gaming sectors.

Summary: Which Cryptocoin Is Better?

It depends on your intentions. Bitcoin is the first cryptocurrency in many crypto investors’ portfolios as it still sets trends in the crypto market. Its price is very high, so even a small increase in % results in significant income. Litecoin, however, is more convenient for everyday transactions and purchases.

Will Litecoin Replace Bitcoin?

Bitcoin and Litecoin have more similarities than differences. Therefore, it is difficult to see why Litecoin should replace Bitcoin eventually. However, considering its higher accessibility to the population, Litecoin might be more frequently used for everyday transactions.

Disclaimer

Please keep in mind that the above information is based exclusively on our observations and is provided for informational purposes only. It doesn’t constitute any kind of financial advice nor represents an official forecast. Cryptocurrency is a highly volatile asset, and you are investing in it at your own risk.

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